Metro crashes to new low as crisis deepens
SHARES in Metro Bank crashed to an all-time low after regulators launched a probe into an accounting blunder.
The stock tumbled 26.5pc, or 345p, to 955p, taking its losses since the error was reported just five weeks ago to 57pc.
The latest sell- off came after Metro revealed the Bank of England and the Financial Conduct Authority (FCA) are looking into the way it assessed the riskiness of some property loans.
The bank is now seeking to raise another £350m from shareholders and £500m from the debt markets to bolster its finances. And in a further blow, a £120m grant awarded to Metro so it can boost its business banking operation is at risk because of the debacle.
When the accounting error was first made public, Metro boss Craig Donaldson said it was uncovered by his own staff.
But days later the Mail revealed it had actually been flagged by the Prudential Regulation Authority (PRA), a part of the Bank of England overseeing the health of the financial system.
Donaldson offered to resign but the board asked him to stay. He is giving up his 2018 bonus to try to make amends.
On Tuesday, Metro unveiled its plans to raise a total of £850m by the end of the year. It means the lender will have sucked in £1.7bn of new funds in three years.
Laith Khalaf, of trading firm Hargreaves Lansdown, said: ‘If there’s a regulatory investigation happening, that lends a lot of uncertainty to what the outcome is going to be and whether there will be financial implications for Metro.’
Metro said the PRA and FCA are probing how the accounting mistake was made. The regulators are thought to be investigating whether the bank’s mistake created a false market in its shares, by giving the impression it was on a more secure financial footing than it actually was.
The watchdogs can fine banks millions of pounds and they can also fine individual bankers or ban them from the industry. Both the FCA and PRA declined to comment.
Just days ago, Metro was awarded £120m from a fund intended to boost competition in business banking, set up using money handed over by Royal Bank of Scotland. Rivals who missed out on the cash, handed out by the Banking Competition Remedies (BCR) body, are now expected to complain.
John Cronin, an analyst at Goodbody, said: ‘I am very surprised at BCR’s decision to award Metro £120m.’
Tory MP Nicky Morgan, chairman of the Treasury Select Committee, said: ‘The latest developments are concerning, especially given that it was awarded the lion’s share of the RBS fund.
‘It is right that regulators are now investigating this.’ BCR declined to comment. Metro shares have dropped 77pc after hitting a record high last March, and are worth less than half its 2000p float price.